03 June 2014

Some Perspective on the US EPA Carbon Regulations

The graph above shows the mix of US electricity sources for 2012 and for 2020 and 2030 under the EPA carbon regulations which were proposed yesterday by the Obama Administration. (You can click on the graph for a bigger version). Sources can be found at the bottom.

Some points:

First, lest there be any confusion, I support the regulations and hope that they are implemented. My general views on using technology standards to stimulate innovation can be found, for example, here. I'd also encourage a close look at Japan's "Top Runner" programs.

The rhetoric surrounding the regulations is tempered by this data, on both sides.

If implemented, they would represent a significant reduction in coal generation from about 39% of the mix to about 33%, a drop of about 15% from total 2012 coal generation (and under different scenarios it could be a bit more or less). The US economy has already seen a larger reduction in coal electricity generation -- a 25% drop from 2005 to 2012 -- and the economy appears to have survived intact.

However, despite this reduction, the overall change to the US electricity mix is best characterized as marginal, rather than revolutionary. This is especially the case from 2020 to 2030 where there is very little projected change in the mix.

The so-called climate benefits of the regulations are thus essentially nil, though I suppose one could gin some up via creative but implausible cost-benefit analyses. Atmospheric carbon dioxide is a stock and flow problem and these proposed regulations make a only a very tiny contribution to the flow side of the equation. That is just math.

The US carbon regulations won't influence future extreme weather or its impacts in any detectable way. Hard to believe I felt compelled to write that.

The non-carbon public health benefits of decreased reliance on dirty coal are the most compelling reasons for the regulations, and they are considerable.

The bottom line is that the regulations are an important step to help motivate the electricity generating sector to move closer to the technological frontier. There will of course be winners and losers, and thus heavy politics. In addition, people love to fight about climate, and to use the climate debate as a political wedge as well as a sledgehammer for all sorts of interests. The proposed EPA regulations will be no different. The reality, at least with respect to the effect of the regulations on the energy sector, will be far more prosaic than the rhetoric.

Sources: EPA, 2014. Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants. Specifically, Panel 1, Table 2-2 here (PDF). Panels 2 and 3 are from the Option 1 (regional) scenario in Table 3-11 in the same source.